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Adamis Pharmaceuticals Corp (NASDAQ:ADMP) Is About To Breakout

Adamis Pharmaceuticals Corp (NASDAQ:ADMP) Is About To Breakout
Written by
Chris Sandburg
Published on
September 8, 2017
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Back at the end of May this year, we told our readers to keep an eye on Adamis Pharmaceuticals Corp (NASDAQ:ADMP).The piece, which was part of our Biotech Catalyst series, pointed to a near term FDA decision rooted in the company's lead development asset, a generic version of Mylan's EpiPen, as a potential major catalyst and one that, for anybody that got in ahead of the event, could serve up considerable returns – assuming it played out in Adamis's favor.And it turned out that it did.At the time, Adamis was trading for $3.65 a share and a market capitalization of just $100 million. Fast forward to today, and the company goes for $5.40 apiece and a $170 million capitalization. That's a $70 million rise in market cap and a 50% premium to share price across the period. ADMP Daily ChartAt its current price, however, Adamis is actually down around 6% from the most recent swing highs. This is a stock that is about to undercut one of the world's biggest-selling preventative and emergency medical devices dramatically and do so against a backdrop of serious price-related upheaval in the biotechnology and healthcare sectors.There’s a $500 million plus market potential for the generic device going forward and there exists sentiment towards the standard branded asset right now that could drive a mass consumer shift towards what markets are looking at as 'Adamis the good guy'.Our point here, then, is that this recent action is almost certainly temporary and that we should soon see a strong and decisive return to the overarching upside momentum in this stock. Not only that but, once the recent highs are broken, it will represent a major technical breakout and this alone should serve to compound the upside momentum and push the company higher.Since the approval, both the company itself and its big pharma competitor, Mylan, have been relatively quiet on the next steps. Whether the latter intends to reduce its price to fall closer in line with that of the generic asset (which has earlier been reported as expected to price in the region of $150 per device, compared to the current price of $600 for two devices) remains to be seen.Even if it does, and as mentioned above, there is a good chance markets (that is, consumer healthcare markets) will favor the generic asset purely to make a point of avoiding Mylan, which has caused controversy over the last five years for (in the opinion of those who need this device, and from the point of view of repeatedly raising price) not treating patients particularly well.The thesis here is purely rooted in the fact that this stock is consolidating right now and has taken a bit of a dip as the shorter-term operators are booking profits on the recent move. Once a commercialization effort gets underway (which we expect will be at latest early next year) and we get an idea of just how large the demand will be for Adamis's lead commercial product, the company is going to start to appreciate in value in line with expectations.Cash on hand isn't great right now, so there is a good chance we will see an equity raise ahead of the initiation of any commercialization strategy. Indeed, that's probably why we didn’t see the company start to roll out the product immediately subsequent to the approval. Said equity raise is probably going to be dilutive, so that's something to keep in mind.However, given the upside potential on this one from its current market capitalization, any equity raise is far from prohibitive to an exposure at current prices and should be seen as a necessary evil that underpins, and is almost certainly entirely negated by, a longer-term upside reevaluation.Here's our previous coverage of this one.We will be updating our subscribers as soon as we know more. For the latest updates on ADMP, sign up below!Image courtesy of Phillip Bradshaw via FlickrDisclosure: We have no position in ADMP and have not been compensated for this article.

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